Substantial pay hikes at Volkswagen Chattanooga potentially garnered by the United Auto Workers could undermine the profitability outlook for VW’s local operations, according to a financial services firm that follows the automaker.
But a labor studies expert said a compensation boost for VW workers would help the Chattanooga area as extra dollars filter through the community.
Financial services giant UBS said in a note to investors released after the UAW’s landmark win last week in Chattanooga that the automaker already has a relatively low operating margin in the U.S., according to news outlet CNBC.
(READ MORE: Third try at Volkswagen)
“Overall, given the substantial pay gap between UAW-unionized workers (at Ford, General Motors and Stellantis) and non-unionized workers in the Southern states, it can be assumed that the vote will lead to more upwards pressure on wages for VW over time,” UBS said in the investor note as cited by CNBC.